The role of Key Management Persons (KMPs), including the MD & Chief Executive Officer, all directors and other senior officials in the insurance industry, will be more challenging from this financial year onwards. This is on two counts: to earn higher pay and incentives, and to drive the business in more tangible ways than earlier, which has to be put in the public domain.
IRDAI links pay and incentives to performance metrics
The Insurance Regulatory and Development Authority of India (Insurance Regulatory and Development Authority of India) on Tuesday amended the existing norms under the IRDAI (Corporate Governance for Insurers) Regulations, 2024, linking KMPs’ remuneration and incentives to a slew of new factors.
“The focus on customer-centric metrics for fixing remunerations and incentives, including grievance redressal and claim settlements, is just one aspect of the new norms prescribed by the insurance regulator,” a MD & CEO of a major private general insurer said.
New performance framework across life and general insurers
For FY 2026–27, the minimum parameters that shall mandatorily be taken into account for the assessment of performance of all KMPs for variable pay or incentives go beyond customer-centric measures.
For life insurers, the ratios include assets under management to total premium ratio, renewal premium to new business premium ratio, policy retention metrics, and expense of management to gross direct premium ratio.
For general and stand-alone health insurers, the parameters include line-wise net incurred loss ratio, renewal premium to new business premium ratio, expense of management to gross direct premium ratio, along with product performance and claim responsiveness indicators.
Concerns over disclosure of sensitive business data
Industry executives said the new framework could be challenging in certain areas, especially where performance metrics depend on customer behaviour and documentation processes.
One CEO noted that claim responsiveness is influenced both by insurer processes and the ability of policyholders to submit complete information.
While some of these parameters were already monitored internally, the key change is mandatory disclosure of business-sensitive information.
Insurers will now be required to publish performance metrics and KMP remuneration parameters on their websites in an “easy to access” and “easy to understand” format, along with data for the preceding three years.
Industry flags competitive and governance challenges
While the move is aimed at improving transparency, some insurers have raised concerns that disclosure of product performance and key metrics could provide insights to competitors, according to a senior actuary at a life insurance company.
Industry experts also noted that boards will face a more difficult task in balancing incentive structures for KMPs without creating internal friction or dissatisfaction among leadership teams.
Published on May 26, 2026